Belo CEO: Networks Likely to Get Retrans Cut

As networks upend the model and seek compensation from affiliates, Belo Co.'s CEO indicated Thursday that she has accepted the new reality, but urged networks to look broadly.

With the networks looking for dual-revenue streams to ward off swings in the ad market, Dunia Shive said she expects "some form of sharing" of retransmission consent revenues that station groups receive.

But, she said, networks should look at a single pile they can collect from across their affiliate base, instead of going station to station.

"If the amounts are reasonable at the affiliate level, meaning smaller amounts ... but on the aggregate basis, they're meaningful to the network," Shive said at an investor event, "I think it can be something that benefits the network-affiliate relationships longer-term."

Belo has four ABC stations, notably in Dallas, and is in negotiations with ABC on a deal that will likely include sharing of retrans dollars. The ABC affiliation agreement expired at the end of 2009 and has been extended until April 1. Shive said she expects another extension, but ultimately a deal "that works for both parties."

Belo, which also has five CBS stations and four NBC affiliates, pulled in $42.6 million in retrans revenue last year. Most of Belo's major agreements with multichannel video providers have been inked, so while retrans dollars will go up, the growth rate is expected to slow in 2010, Shive said.

For years, networks paid affiliates to offer their programming and Belo still eked out about $14.2 million in those fees -- 2.4% of revenue -- in 2009. Ultimately, that should go to zero.

Now, the likes of ABC and CBS want what amounts to reverse compensation, and in Belo's case, a portion of its $42.6 million -- 7.2% of revenues.

While retrans fees have provided a second revenue stream for station groups like Belo, networks are now effectively in position for three: advertising; some of their affiliates' retrans money; and cash they get themselves for distribution of their owned-and-operated stations.